RATES – WHAT HAPPENS NEXT? RATES

•Very likely the Fed will raise rates for the first time in more than nine years at its December policy meeting.

•The market has built in a more than 75% chance of a Fed move in December.

•Changes in short-term rates typically have a limited impact on longer maturity prices.

•Historically, longer-term rates have risen only modestly during a Fed rate-hike cycle. There is no need to worry about a significant increase in longer-term interest rates.

•Conclusion: Bond yields anticipate future market conditions. As a result, most of the impact of a rate-increase cycle is priced into the market before rate hikes begin. The Fed does not want to surprise the market.

SOURCE: Reuters